There's A Good Chance Your Ex-Spouse Is Hiding Income In The Gig Economy

It's always been a challenge getting non-custodial parents to pay their portion of child support. In 2013, parents owed approximately $32.9 billion of support, but only 68.5 percent of custodial parents received their payments. However, the burgeoning gig economy is making it even more difficult for custodial parents to get what's due because it's much easier for non-custodial payments to hide this money. Here's more information about this issue and what you can do to make your ex-spouse pay.

Gig Economy Makes It Easy for People to Hide Income

Traditionally, when the state has had to go after parents who fall behind in their child support payments, the government would garnish their wages and bank accounts. Additionally, companies are required to report to the government whenever they hired someone who owed child support, which made it hard for parents to escape their responsibility by changing jobs.

Unfortunately, the gig economy has thrown a wrench in the state's strategy in a couple of ways. First, people who work in the gig economy—e.g. driving for Lyft or renting rooms on AirBNB—are not considered employees. Rather, they are categorized as contractors, and many states don't require companies to send them a list of contractors who work for them. However, even in states that do require companies to report contractors to the appropriate agency, not all of them do so. Regardless of the reason, the state often doesn't know the deadbeat parents are actually earning income.

A second way the gig economy is hurting the state's efforts to hold parents responsible for paying their child support arrearages is it makes it easy for those parents to hide their income. Most payments are sent to electronic wallets rather than bank accounts. For instance, people who offer services on Fiverr and other gig marketplaces can receive their payments via PayPal. Since PayPal only reports a person's account to the IRS if the individual receives over $20,000 in payments during the year, the state may never know the parent has an account with the payment processor.

As a result of these issues, more and more custodial parents are having a hard time getting money from the co-parents, even though they may know their co-parent has a source of income. However, there are a couple of ways you can help the state collect.

Holding the Non-Custodial Parent Responsible

One option is, if you know your ex-spouse has a virtual wallet where they're hiding their money, tell the state about it. For instance, if you know your ex has a PayPal account or a prepaid debit card, let the state know. Virtual wallets are considered assets. Even though they are hard to trace, the state can still garnish and seize those assets once they know about them.

If you live in a state where gig companies are required to report the names and information of their contractors to the state, let your case worker know whether you suspect your spouse is working for one of those companies (e.g. Uber). The state can make inquiries to determine whether or not the person does work for the business and take steps to garnish his or her income.

A third thing you can do is point to circumstantial evidence that your ex is getting paid under the table. For instance, produce social media posts where your ex is bragging about getting money from a gig or point to a purchase the person couldn't possibly afford on his or her current income (e.g. a $500,000 home on a $25,000 year job).

There may be other things you can do to collect the income you are owed from an ex-spouse who refuses to pay. Contact a family law and divorce attorney for assistance.